UPDATE 2-99 Cents Only Stores gets $1.34 billion buyout offer

* Gets $19.09 a share takeout offer

* Offer comes from Schiffer-Gold family, Leonard Green & Partners

* Company to form special committee to vet deal

* Shares trading above offer price, at $19.88 (Adds background on Schiffer-Gold family, Leonard Green & Partners)

March 11 (Reuters) - 99 Cents Only Stores has received a bid from the family that runs the company and a private equity firm to take the company private for $1.34 billion in cash.

The Schiffer-Gold family, which owns about 33 percent of the company, has teamed up with Leonard Green & Partners L.P. to make a $19.09 per share offer. The bid price represents a 14 percent premium to the company's Thursday closing price.

Shares rose as high as $19.97 in early trading, suggesting investors expect a higher bid.

The discount retailer said it will form a special committee of independent directors to consider the proposal.

According to the proposal, the Schiffer-Gold family is prepared to contribute a "substantial portion" of its stock ownership as part of the deal.

The deal would be subject to financing, the company said.

About a third of the company is controlled by the Schiffer-Gold family, which includes the company's chairman David Gold, its chief executive Eric Schiffer and other top executives, according to the company's website.

Leonard Green & Partners has been on a retail buying spree in recent months. The buyout firm, along with TPG Capital, bought upscale apparel retailer J.Crew earlier this month for $2.86 billion.     In December, Leonard Green offered to buy fabric and craft products retailer Jo-Ann Stores Inc for about $1.6 billion in cash. Jo-Ann shareholders are scheduled to vote on the deal on March 18.     In December, shares of BJ's Wholesale Club Inc rose after a New York Post report said that Leonard Green may make a hostile bid for the retailer.  In February, BJ's said it may put itself up for sale. No deal has been announced.

Family Dollar Stores Inc recently rejected a $7 billion acquisition offer from Nelson Peltz's Trian Group, while Big Lots is exploring a sale, among other options.

Discount stores have become attractive shopping destinations for people who are hesitating to spend large amounts of cash following several years of financial woes because of high unemployment and the recession.

They also have strong cash flow and clean balance sheets. That and their real estate assets have made them attractive buyout targets, especially to private equity firms.

Shares of the company rose as much as 20 percent to $19.97 on Friday morning, their highest price in more than six years. They were last trading up 19 percent at $19.88. (Reporting by Abhishek Takle in Bangalore, additional reporting by N.R. Sethuraman. Editing by Anthony Kurian and Robert MacMillan.)